There are a number of reasons why P2P-based digital currency Bitcoin has taken off as the geek craze du jour. The fact that it’s decentralized and under no governing body’s control appeals to many techies’ libertarian sensibilities and keeps transaction costs to a minimum, the cryptographic way in which new Bitcoins are created is elegant and ungameable, distinguishing Bitcoin from doomed past virtual currencies like Flooz, and the fact that every mainstream media article about Bitcoin refers to its potential use in paying for drugs and prostitutes under the radar allows the computer geeks who use the currency to feel like dashing vigilantes, even though the only people who are actually using Bitcoin are other computer geeks.
But despite questions about its legality and stability as a currency, one key reason that Bitcoin is blowing up right now is speculation: One early adopter who accepts Bitcoin to pay for his software development services told Betabeat that many of the early users are treating it as an investment vehicle. Since only a fixed number of Bitcoins are in circulation according to a strict curve governing their disbursement, and since they’ve been growing in popularity, they have thus far been a deflationary currency, meaning that a given Bitcoin has on average continued to have more purchasing power as time has gone on and the demand for them has increased.
Contributing to this speculation is that Bitcoins are free to generate: One simply uses a computer’s available processing power to try to solve a math problem by hash [more info on that here], and if they manage to do so: Free Bitcoins. Well, not actually free: On average, the electricity used to perform these operations costs more money than the Bitcoin value generated. But just as people play the lottery for fun despite knowing that they’ll probably lose money, so is there a game-like component to hoping to ‘win’ new coins. Previously, this has been accomplished with a downloadable P2P client, but now, thanks to the efforts of a programmer named Donny, it’s possible to mine for Bitcoins within one’s browser.
He explains:
1. Go to the bitcoin generation page and click “Start Generating”. You should see the speed and the estimated time changing as in the screenshot below.
2. You can register an account while it’s generating (if you’ve generated any so far, it’ll be transfered to your new account)That’s all it takes.
The current payout is shown on the generation page. It’s a simple pay-per-share with a fee of 3%. The miner requires Java version 1.5 or higher.
…
I’ve tried to make it really easy for non-technical people to start bitcoin mining. If you have any non-technical friends, you can send them this link and maybe pique their interest in bitcoin. Once they’ve generated 0.01 BTC they’ll have to download the standard bitcoin client so they can send it to themselves – hopefully this will increase the popularity of bitcoin.
Intriguingly, he is planning on making a version that can be embedded on a website, so that “your visitors will mine bitcoin on your behalf.”
To make any money Bitcoin mining — and even that’s quite iffy — prospectors have turned to mining pools, wherein a group of people agree to share their spoils, thus distributing computing power and making it more likely that one will get any payment. Since the browser-based client currently uses CPUs only to mine — GPUs are generally a lot more effective — pooled mining is probably the only way any given browser-based miner will see a (Bit)dime. And as its proponents point out, the main ‘point’ of Bitcoin is, after all, to transfer money in a low-cost way without a third party shaving off a margin: The surest way to accumulate Bitcoins, just like the best way to accumulate dollars, is to provide goods or services in exchange for them.
Still, until one is ready to start making small transactions or accepting their paychecks in Bitcoin, it makes for an easy, no-downloads-required entry-level foray into Bitcoindom for the uninitiated.
Links:
>>>Bitcoin homepage/P2P client
(Bitcoin Plus via Bitcoin Forum via Slashdot)
Published: May 19, 2011 10:41 am